Advice re daughters CTF fund please

[Phooey]

Hi,

Just had yearly statement for my daughters CTF. It says "All shares bought are Accumulation Shares in our UK Growth & Income Fund"

and..

"The Authorised Corporate Director (ACD) of the fund is HSBC Global Asset Management (UK) Limited)"

Am i right in thinking it's this fund? - http://www.morningstar.co.uk/uk/funds/snapshot/sna...

I'm trying to determine if the fund is any good as the AMC (Annual Management Charge) is 1.5%

Looking at last years statement (23/08/2017 - £16875.17) to this years statement (23/08/2018 - 19713.00) and considering I've been investing a monthly amount of £200 (£2400 total) I work it out to be approx +2.5% growth in the last 12 months?

Fund has another 8 years to run until she is 18. Could we do any better elsewhere? Annoyingly my IFA doesn't touch children's investments (CTFs / JISAs etc)

Thank you

[anonymous-user]

I transferred my daughter’s Hsbc CTF into a HL JISA and then invested in a couple of trackers and am much happier with the lower fees and performance so far.

[JulianPH]

Badda said:

I transferred my daughter’s Hsbc CTF into a HL JISA and then invested in a couple of trackers and am much happier with the lower fees and performance so far.

OP - The fund you link to has an AMC of 1.15% so if you are paying 1.5% your are either in a different fund or a different share class of the same fund. It's performance is not exactly brilliant, but at least it has gone up rather than fallen.

I would consider following Badda. It would cut the charges in half for a start and you would have more control and flexibility.

[WhiskyDisco]

Did your IFA give a reason why s/he doesn't touch JISAs/CTFs?

[JulianPH]

WhiskyDisco said:

Did your IFA give a reason why s/he doesn't touch JISAs/CTFs?

It will be because there is not enough money in it for the adviser, even though the adviser will already have been creaming of the OP's investments.

Personally, I would sack an adviser who was happy earning a fortune from my investments but wouldn't advise me on an investment I had taken out for my daughter. It is a classic example of the shocking behaviour of financial advisers.

[PhilboSE]

JulianPH said:

It will be because there is not enough money in it for the adviser, even though the adviser will already have been creaming of the OP's investments.

Personally, I would sack an adviser who was happy earning a fortune from my investments but wouldn't advise me on an investment I had taken out for my daughter. It is a classic example of the shocking behaviour of financial advisers.

Without opening the running sore debate on IFAs, it's the same for the platforms. My ex-IFA had me on Cofunds, primarily because it was B2B and required him to sit in the middle, adding latency and costs (and errors) to my switches. But Cofunds didn't offer the full range of JISAs and child SIPPs because they couldn't be bothered and were happy creaming me for a big fat %age of my investments.

Switched to HL as they offered the full range of vehicles that I wanted, dumped the IFA, haven't looked back. HL also negotiated on their prices whereas Cofunds wouldn't entertain it.

[Phooey]

JulianPH said:

Badda said:

I transferred my daughter’s Hsbc CTF into a HL JISA and then invested in a couple of trackers and am much happier with the lower fees and performance so far.

OP - The fund you link to has an AMC of 1.15% so if you are paying 1.5% your are either in a different fund or a different share class of the same fund. It's performance is not exactly brilliant, but at least it has gone up rather than fallen.

I would consider following Badda. It would cut the charges in half for a start and you would have more control and flexibility.

Thanks everyone for replies.

Mmmm not sure which fund it is then... I know it says Stakeholder on the paperwork. Because it's a Stakeholder will the AMC still be 1.5% after 10 years? (don't know where I got this from but sure I read something somewhere one day about charges dropping after 10 years.. )

I'll take a look at the HL JISA - any particular one? I appreciate I should be doing my own research so thanks for any help



As for my IFA not touching junior investments - basically as Julian says above.

[JulianPH]

PhilboSE said:

JulianPH said:

It will be because there is not enough money in it for the adviser, even though the adviser will already have been creaming of the OP's investments.

Personally, I would sack an adviser who was happy earning a fortune from my investments but wouldn't advise me on an investment I had taken out for my daughter. It is a classic example of the shocking behaviour of financial advisers.

Without opening the running sore debate on IFAs, it's the same for the platforms. My ex-IFA had me on Cofunds, primarily because it was B2B and required him to sit in the middle, adding latency and costs (and errors) to my switches. But Cofunds didn't offer the full range of JISAs and child SIPPs because they couldn't be bothered and were happy creaming me for a big fat %age of my investments.

Switched to HL as they offered the full range of vehicles that I wanted, dumped the IFA, haven't looked back. HL also negotiated on their prices whereas Cofunds wouldn't entertain it.

Good for you, seriously.

I wasn't trying to reopen a debate on financial advisers (the vast majority of which are no longer independent by the way, but now restricted), just answering the question raised as directly as possible (which your own experience supports).

There are other platforms that do offer the full range of vehicles you wanted, so your financial adviser's choice of platform was obviously not the most suitable one for your requirements, but evidently was the most suitable one for your adviser. Assuming you had explained your requirements to your adviser this is a clear case of bad financial advice.

Cheers

[JulianPH]

Phooey said:

Thanks everyone for replies.

Mmmm not sure which fund it is then... I know it says Stakeholder on the paperwork. Because it's a Stakeholder will the AMC still be 1.5% after 10 years? (don't know where I got this from but sure I read something somewhere one day about charges dropping after 10 years.. )

I'll take a look at the HL JISA - any particular one? I appreciate I should be doing my own research so thanks for any help



As for my IFA not touching junior investments - basically as Julian says above.

Hi Phooey, Stakeholder funds were originally capped at 1% a year and then changed to a 1.5% a year cap for the first ten years and 1% a year thereafter. This was/is certainly the case with Stakeholder pensions and so I am assuming it is also the case with any Stakeholder product.

HL (like every other provider offering them) only have one JISA (it is, after all, only the tax 'wrapper'). You can pick any funds you want and a global equity tracker (or equity and bond, however you see fit) would be a low cost option. Vanguard is always highly rated, but their Lifestyle funds are considerably more expensive than their index tracking ETFs (though still cheaper than most other options).

Remember that you have to add the HL 0.45% platform fee onto the cost of the investments you hold. Again, this is still much cheaper than using an adviser though.

Cheers

[Phooey]

JulianPH said:

Hi Phooey, Stakeholder funds were originally capped at 1% a year and then changed to a 1.5% a year cap for the first ten years and 1% a year thereafter. This was/is certainly the case with Stakeholder pensions and so I am assuming it is also the case with any Stakeholder product.

HL (like every other provider offering them) only have one JISA (it is, after all, only the tax 'wrapper'). You can pick any funds you want and a global equity tracker (or equity and bond, however you see fit) would be a low cost option. Vanguard is always highly rated, but their Lifestyle funds are considerably more expensive than their index tracking ETFs (though still cheaper than most other options).

Remember that you have to add the HL 0.45% platform fee onto the cost of the investments you hold. Again, this is still much cheaper than using an adviser though.

Cheers

Cheers mate and hope you well!

Ok I understand now re 'wrapper'! I hadn't looked at HL so just assumed, like my IFAs, you had a choice of 3or4 options (portfolios) depending upon risk. I'll have to do a bit of research then - ideally looking at a further (at least) 8 years, although hoping to carry it on until her early-mid twenties so happy to dab into a bit of 'high' risk stuff

[JulianPH]

Phooey said:

Cheers mate and hope you well!

Ok I understand now re 'wrapper'! I hadn't looked at HL so just assumed, like my IFAs, you had a choice of 3or4 options (portfolios) depending upon risk. I'll have to do a bit of research then - ideally looking at a further (at least) 8 years, although hoping to carry it on until her early-mid twenties so happy to dab into a bit of 'high' risk stuff

Hi mate, it's been a while! I am very well and I hope the same with you?

HL do offer that, but it is very expensive (more than Stakeholder). You may be better off putting 20% into a couple of higher risk/reward funds and the rest in low cost ETF trackers (mainly equities, but with some bond exposure) and then letting it run its course until she is a couple of years from wanting to access it.

I've put money for my daughter into an 'adventurous' managed portfolio of low cost ETFs. She is 13 now (where does the time go!) and I am sticking with this for another five years before considering lowering the risk/reward. If she wants it for a house purchase I'll draw the rick/reward right in. If she wants to take some income from it I'll move it to a 'balanced' portfolio (or tell her she is spending more than she can afford!). If she wants to use it as a foundation for future savings I'll call that a good result! (I am not holding out for this though!!!).

Give me a shout if you would like to chat further, though I can only share my personal thoughts on investing for daughters and cannot give you any financial advice (caveat over!).

[Phooey]

JulianPH said:

Hi mate, it's been a while! I am very well and I hope the same with you?

HL do offer that, but it is very expensive (more than Stakeholder). You may be better off putting 20% into a couple of higher risk/reward funds and the rest in low cost ETF trackers (mainly equities, but with some bond exposure) and then letting it run its course until she is a couple of years from wanting to access it.

I've put money for my daughter into an 'adventurous' managed portfolio of low cost ETFs. She is 13 now (where does the time go!) and I am sticking with this for another five years before considering lowering the risk/reward. If she wants it for a house purchase I'll draw the rick/reward right in. If she wants to take some income from it I'll move it to a 'balanced' portfolio (or tell her she is spending more than she can afford!). If she wants to use it as a foundation for future savings I'll call that a good result! (I am not holding out for this though!!!).

Give me a shout if you would like to chat further, though I can only share my personal thoughts on investing for daughters and cannot give you any financial advice (caveat over!).

Yeah very well thanks mate

Sounds interesting that fund you have set up for your daughter... without sounding like a copy cat is this something anyone can invest in? I want something easy that I can walk away from and forget for a number of years

cheers

[JulianPH]

Phooey said:

Yeah very well thanks mate

Sounds interesting that fund you have set up for your daughter... without sounding like a copy cat is this something anyone can invest in? I want something easy that I can walk away from and forget for a number of years

cheers

No problem mate, I can let you know what I hold (and in what proportion) but can't go further than that as it could be seen as a personal recommendation. Sorry to have to state the obvious here, but me telling you what I do is not the same as me recommending you do as I do (if that makes sense?!)

[Ginge R]

More broadly..

https://www.moneyobserver.com/news/parents-urged-t...

[Derek Chevalier]

JulianPH said:

Vanguard is always highly rated, but their Lifestyle funds are considerably more expensive than their index tracking ETFs (though still cheaper than most other options).

Aren't the costs broadly comparable when comparing like with like (i.e. both global)?

Lifestrategy at 22bps
https://www.vanguardinvestor.co.uk/investing-expla...

and All-World ETF at 25bps?
https://www.vanguardinvestor.co.uk/investments/van...

[Derek Chevalier]

JulianPH said:

I wasn't trying to reopen a debate on financial advisers (the vast majority of which are no longer independent by the way, but now restricted)

Cheers

I'm not seeing that in the official data, unless you were hinting at something else?

http://citywire.co.uk/new-model-adviser/news/fca-d...

"For 2017, 36% of all adviser charges revenue came from restricted advice, with 64% coming from independent advice.

The proportion of fee revenue from restricted advice was up from the previous year when it was 33%, the year before that it was 34%.

Despite the fact restricted advice accounts for over a third of adviser charges, the FCA data found 87% of financial advisers offer independent advice compared to 11% restricted and 2% both. This split was unchanged from the previous year."

[JulianPH]

Derek Chevalier said:

Aren't the costs broadly comparable when comparing like with like (i.e. both global)?

Lifestrategy at 22bps
https://www.vanguardinvestor.co.uk/investing-expla...

and All-World ETF at 25bps?
https://www.vanguardinvestor.co.uk/investments/van...

That has surprised me! I always thought their Lifestrategy was closer to 50bps and their ETFs were between 10bps to 18bps.

Every day's a school day!

With regard to 'independent' and 'restricted, I think these figures are massively distorted by advisers incorrectly positioning their services.

FCA said:

An adviser or firm that provides independent advice is able to consider and recommend all types of retail investment products that could meet your needs and objectives.

Independent advisers will also consider products from all firms across the market, and have to give unbiased and unrestricted advice.

An independent adviser may also be called an 'independent financial adviser' or 'IFA'.


A restricted adviser or firm can only recommend certain products, product providers, or both.

The adviser or firm has to clearly explain the nature of the restriction. If you are not sure you should ask for further information, but some examples of restricted advice are where:

*the adviser works with one product provider and only considers products that company offers
*the adviser considers products from several – but not all – product providers
*the adviser can recommend one or some types of products, but not all retail investment products
*the adviser has chosen to focus on a particular market, such as pensions, and considers products from all providers within that market

Restricted advisers and firms cannot describe the advice they offer as 'independent'.

Yet, for example, network members that are restricted to the products/providers their network allow (who therefore are clearly restricted advisers) still call themselves independent.

[Testaburger]

JulianPH said:

0.22%? Well I never...
Or words to that effect.

Indeed, my VLS100 is 0.22, and Vanguard’s platform fee is 0.15 on top, so 0.37% total.

So, very reasonable; a notable saving over HL (for your first million) who I would like to use (but they won’t touch me as a non-resident).

[JulianPH]

Testaburger said:

JulianPH said:

0.22%? Well I never...
Or words to that effect.

Indeed, my VLS100 is 0.22, and Vanguard’s platform fee is 0.15 on top, so 0.37% total.

So, very reasonable; a notable saving over HL (for your first million) who I would like to use (but they won’t touch me as a non-resident).

Ahhh, I can see my error. I must have seen the Lifestrategy fee coupled with the platform fee and one of their ETFs on a stand alone basis!

Quite incredible value for money!!

[Phooey]

Ok guys, sat here thinking aloud... bit of hangover so forgive me if this is a crazy idea

The basics -
Daughters CTF - been running 10yrs - £20k transfer value - currently invested in HSBC Stakeholder fund and not performing well + high charges (1.5%) - will run for AT LEAST another 8 yrs but hopefully until her mid-twenties when she can use it for a sizeable house deposit.

The Phooey idea-
So, based on the above.. whats's the opinion of just transferring the whole £20k pot into something like the VLS100 (within a JISA obviously) and apart from contributing a monthly sum of £200.. just sit back and let it run / forget about it?

I need a simple approach. For example - I know the CTF hasn't been performing well (high charges) for a few yrs now and I've still done nothing about it! I'm crap with paperwork etc is the reason for burying my head in the sand with it.

Cheers

ps - cheers in advance from little Miss Phooey